Connecting with the customer has always been key to retail, but these days connecting in the right way at the right time with the right information and above all the right experience is increasingly becoming key. Paul Skeldon, Mobile Editor, InternetRetailing explores further.
Connecting with customers has created something of a surprise mini-trend in early 2016: shoppers are increasingly making more use of apps to ‘do’ mobile commerce, with the upshot that more etail is being done on mobile than ever before.
This is all because experience and convenience have finally merged – at least in consumers’ minds – and many apps are starting to deliver.
This rise in app use is not only fuelling the growth of m-retailing past the 50% mark, according to IMRG’s latest figures, but is also starting to see renewed interest among retailers in loyalty and how to build that into the mobile experience.
According to a study by Criteo, published in its Q4 2015 State of Mobile Commerce Report, four in 10 purchases occur across multiple devices or channels and of that, close to one-third are completed on a mobile device. And apps are playing a key role, says Jonathan Wolf, Chief Product Officer, Criteo. “Retailers and brands with intuitive apps that highlight relevant products to consumers and remove barriers to purchase see stronger sales and higher values. Building an app that displays useful products and streamlines the path to purchase is necessary to driving engagement, conversion and revenue.”
Of those retailers that have prioritized the mobile experience, mobile apps accounted for 54% of all mobile transactions in the retail industry, and 58% of mobile transactions in the travel industry, says Criteo’s study of 1.4 billion online transactions worldwide. Shoppers using mobile apps browsed 286% more products than mobile web shoppers, contributing to an add-to-basket rate 90% higher than mobile browsers. The overall conversion rate on an app was 120% higher than mobile browsers.
These are impressive figures and make an even stronger case for apps when compared to other studies. The heads of 100 leading retailers quizzed by Urban Airship, for example, show that between 21 and 50% of web sales now come from apps.
Another study by IRUK Top500 Knowledge Partner Poq shows that the average person shopping from an app generates 2.6 times more revenue for a retailer than someone shopping from a mobile site and 1.5 times more than someone using a desktop device. Customers using apps also interacted with retailers 2.8 times more often than customers using the mobile website.
As ever the shopper demand is there for interaction – and apps increasingly can offer what they want: a personal, rich, efficient and timely way to interact and buy. Consumers are also wising up to using apps as they appear in Google searches, as well as many smartphone users using the phone’s internal search functionality to search out the brand they want to interact with and using the app.
There is also the rise of more targeted marketing, which is making apps the natural end point of much more personal marketing campaigns.
Mobile advertising is starting to become more accepted by users – despite the rise in ad blockers, which themselves are making retailers up their marketing and interaction games – with some 64% of consumers surveyed by Quantcast claiming to have been influenced to purchase by a mobile ad – a figure that rises to 80% among millennials.
“New technologies that enable more targeted shopping experiences will help to significantly improve the way in which retailers engage with their customers during peak trading in 2016,” says Poq Co-Founder, Michael Langguth. “We predict that campaigns that take into account contextual influences such as geography will drive the most outstanding results this year.”
Where it gets interesting is where the worlds of targeted mobile marketing and app experience collide with loyalty schemes: a collision that is ever more likely as forward thinking retailers react to the shift to apps shopping.
A study of 1,000 people in the UK by leading mobile app developer, Apadmi, found that 8 in 10 Brits would like to start collecting loyalty points on a retail app. The research also found that 29% of shoppers would be happy to share their location with a retail app to gain incentives and loyalty points when they walk around the store.
Customer loyalty card schemes are currently a big hit with shoppers, with more than half of consumers (51%) claiming they own more than one loyalty card, and 46% stating that they regularly collect and spend points on a reward card.
However, at present, only 20% of UK smart phone users interact with a retail loyalty scheme on their phone.
Bringing the loyalty idea into the app, then eventually combining it with payments, you have the making of a compelling, all encompassing experience for the consumer – and a compelling experience is what makes money.
In a world where choice is rampant – to the point of rendering people incapable of choosing – hooking them into your ‘experience’, rewarding them and making it relevant is a clear winner.
Get the experience wrong though and as many as a third won’t purchase from you again. Ever.
CLOSING THE GAP
Alternatively, when a good mobile experience is achieved, 76% report that it has an influence on their loyalty to a brand, says the study from Sitecore and Vanson Bourne.
Scott Anderson, CMO, Sitecore comments: “The Vanson Bourne research reveals vast unmet consumer expectations and a very real need, in terms of loyalty and sales, for businesses to close the gap between consumer expectations and what brands deliver today.”
“People expect businesses to design a thoughtful mobile experience that helps them go through their journey,” adds Brian Solis, analyst and author of the Sitecore ebook, Mobile is Eating the World. “They want businesses to understand their intent and design content, paths, and outcomes that align with the context of each moment of truth. They don’t want generic click paths, 1990’s websites, marketing-speak, gimmicks, or friction.”
This is where the consumer mind set is, at least. In the retail world there is still some catching up to do. Despite the hype over apps five years ago – admittedly when they weren’t really worth the money people were spending on them – there has been surprisingly little movement.
Poq’s research for the 2016 IRUK 500 also shows that just 23% of Top 500 retailers in the UK have a transactional app in 2016 – with only a fifth having an app at all. This is only slightly better than the IRUK 500 in 2015: progress has been glacial.
Consumers now want apps and demand an experience that only apps can deliver. The likes of Missguided, which caters to a very young audience, has launched an app that not only is transactional and slick, but also features a Tinder-like swipe-to- like feature.
According to Langguth from Poq, which built the app for Missguided, this is the way retail apps are going to go.
“The next generation of customers uses apps for everything,” he says. “Great apps are often either very engaging – like Instagram and Pinterest – or they are super convenient – like Uber and Citymapper. Missguided has built a retail app on our platform that combines both of these attributes: it is extremely convenient and deeply engaging. This is the perfect example of what a cutting-edge retail app can offer: Customers are always logged in to an addictive and personalised shopping experience, and can check out using just their fingerprint.”
This sort of ‘value-add’ in retail apps is going to become standard and part of what will make consumers loyal to any one brand – perhaps even more so than price.
According to Andrew Bray, Managing Director at retail technology specialist K3 CRM: “We are seeing a shift away from traditional price wars as retailers explore new ways to engage with their customers to build loyalty. Retailers are looking for ways to show existing customers they are loved, ensuring they remain loyal to their brand. If they make it easier for customers to shop with them, for example by giving them unique deals as a reward for loyalty and by opening up stronger lines of communication to engage with their brand, then a customer is likely to return again and again. A happy customer is also a customer who will refer their favourite brands to their friends as well as remaining loyal themselves. This can have a positive impact on bottom line figures for retail businesses.”